Fiscal Year 2021 State Budget
On September 29, 2020, Governor Phil Murphy signed the $32.7 billion, nine-month Budget for Fiscal Year 2021.1 The budget included $700 million in new taxes and $4.5 billion in borrowing.
Governor Murphy presented his original budget to the Democrat-controlled Legislature in late February. Less than two weeks later, the coronavirus took hold in New Jersey, wreaking havoc on the state’s finances. As a result, New Jersey’s traditional June 30 budget deadline was pushed back to September 30 as officials worked to get a clearer sense of the state’s financial picture. In June, Governor Murphy and the Legislature agreed to a $7.7 billion, three-month stopgap spending plan that covered July 1 to September 30.2 The revised, nine-month budget covers the period from October 1 to June 30.
In the budget, the tax rate on income of more than $1 million will increase from 8.97 percent to 10.75 percent. This long-sought “millionaire’s tax” fulfills one of Governor Murphy’s major campaign promises3 and matches the tax rate paid on income of more than $5 million. Governor Murphy unsuccessfully sought this tax rate in his two previous budgets.
Additionally, New Jersey will provide rebates of up to $500 for hundreds of thousands of New Jersey families whose single-parent incomes are less than $75,000 or whose two-parent household incomes are less than $150,000.
New Jersey maintains funding for a wide range of critical programs, including K–12 education, municipal aid, direct property tax relief (including the Homestead Benefit and the Senior Freeze), the Child and Dependent Care Tax Credit and postsecondary tuition assistance. The budget also makes new investments in the Clean Water and Drinking Water programs, the Children’s System of Care, Regional Coordinator Hospitals and Federally Qualified Health Centers, special education, early voting and the state’s emergency feeding organizations.
Through the budget, New Jersey will make a nearly $4.8 billion contribution to the state pension system, which represents the largest percentage of the actuarially determined contribution (ADC) contributed in 25 years. Additionally, the budget includes a $2.5 billion surplus, which represents 6.2 percent of appropriations over the 12-month period and is necessary should the state have another resurgence of COVID-19.
“The budget includes a $2.5 billion surplus, which is necessary should the state have another resurgence of COVID-19.”
New Jersey will issue up to $4.5 billion in general obligation bonds to help address the economic fallout created by COVID-19 and to better position the state to weather any future public health and economic uncertainties. The type of borrowing facility that will be utilized, the interest rates and the repayment schedules will be determined based on market conditions when the state is ready to issue the bonds over the next several months.
As part of the budget, the Governor signed the following legislation.
Assembly Bill No. 47224: This bill submitted by the Assembly Budget Committee increases the annual assessment levied on health maintenance organization (HMO) premiums from 3 percent to 5 percent, which is expected to generate another roughly $100 million in new revenue.5 This assessment is statutorily allocated to the Healthcare Subsidy Fund for the purpose of providing charity care payments to hospitals in accordance with the formula used for the distribution of charity care subsidies. New Jersey raised that assessment from 2 percent to 3 percent last year.
Assembly Bill No. 47216: This bill sponsored by Assemblywoman Shavonda Sumter and Senator Stephen Sweeney imposes the existing corporation business tax (CBT) surtax at a rate of 2.5 percent until December 31, 2023. The tax rate on businesses making more than $1 million will climb from 10.5 percent to 11.5 percent under the budget. The higher business tax rate would expire in four years under the budget, although the current rate is the result of an increase in 2018 that was set to expire in 2022. Now that date is pushed farther out. According to the New Jersey Business and Industry Association, the rate of 11.5 percent will be the highest in the nation.7
The budget went into effect on October 1, 2020.
New Jersey Healthcare Transparency Act
In an effort to better inform patients seeking and receiving medical care, the New Jersey Legislature is advancing a bill known as the Healthcare Transparency Act. The bill would create new identification requirements for healthcare professionals, as well as new regulations for print, radio and television advertisements.
Assembly Bill No. 4143/Senate Bill No. 2465. New Jersey Healthcare Transparency Act8: Sponsored by Assemblyman Herb Conaway and Senator Stephen Sweeney, this bill requires any advertisement for a healthcare professional licensed or certified to practice under state law to include the type of licensure the professional was issued.
The term advertisement is defined in this bill as any communication or statement directly controlled by or administered by a healthcare professional or a healthcare professional’s office personnel. Advertisement also includes any situation where a healthcare professional is utilizing a professional degree or license to influence opinion or imply expertise in a healthcare topic.
Advertisements are to exclude deceptive or misleading information relating to the healthcare professional, including, but not limited to, any affirmative communication or representation that misstates, falsely describes, holds out or falsely details the professional’s skills, training, expertise, education, public or private board certification or licensure.
Healthcare professional is defined broadly in the bill and would include any person licensed, certified, registered or otherwise authorized pursuant to Title 45 or Title 52 of the revised statutes, or by any department or entity within a department of the executive branch or any other entity created in the future to license or regulate a healthcare profession.
“The bill requires a healthcare professional to communicate, when providing in-person care, the specific professional license and professional degree the professional holds.”
The bill requires a healthcare professional to communicate, when providing in-person care, the specific professional license and professional degree the professional holds. Additionally, the bill permits a healthcare professional to communicate the information through a name tag or embroidered identification. The name tag or embroidery is to include, at a minimum, the full name of the healthcare professional. In a hospital setting and at the discretion of hospital administrators, the professional’s name can be listed as the full first name and last name or the full first name and first initial of the last name. The bill requires the name tag or embroidery to also include the professional degree and professional license of the healthcare professional. If a healthcare professional is providing direct patient care at a hospital, the professional is to wear a recent photograph, unless otherwise directed by hospital administrators.
Under the bill, a poster or other signage, in sufficiently sized font, conveying the professional license and professional degree held by the professional, is to be placed at the office or offices where the healthcare professional provides healthcare services to scheduled patients in an ambulatory setting. The bill provides that office does include in-patient hospital or emergency department patient care. Additionally, the bill excludes telehealth and telemedicine services from the requirements regarding name tags and embroidery, as well as posters and other signage.
A medical doctor or doctor of osteopathic medicine in collaborative practice agreements with non-physician healthcare professionals is required to post clearly and conspicuously when the medical doctor or doctor of osteopathic medicine is present. As used in the bill, office does not include in-patient hospital or emergency department patient care.
The bill prohibits medical doctors or doctors of osteopathic medicine from advertising or holding themselves out to the public as being certified by a public or private board unless the board is a member of the American Board of Medical Specialties (ABMS) or American Osteopathic Association (AOA) or is a non-ABMS or non-AOA board that requires following certain prerequisites for issuing certification.
The bill states that it is unlawful for a healthcare professional to fail to comply with certain provisions of the bill. The bill clarifies that nothing in its provisions imposes liability on news media that accept or publish advertising that may fall within the scope of the bill. The bill also provides that nothing in the bill is to limit a licensing board, principal department of the executive branch of state government or any entity within any department or any other entity created to regulate a healthcare profession to adopt more stringent standards for its licensees.
Bill sponsor Senator Sweeney stated, “Just as people deserve to know the food they buy or the cars they drive are safe and regulated by the state, they deserve to know the medical treatments they are receiving are being performed by a qualified professional.”9
For the first time in 20 years, Democrats have a chance to return to power in the U.S. Congress and state legislatures in some key states, including Pennsylvania (which has seats in both houses up for election this year), through redistricting. A total of 25 seats of the Senate’s 50 seats are up for election,10 and all 203 seats in the House are up for election.11
States draw new electoral maps every decade based on new census population data, and the boundaries play a significant role in determining which party controls Congress and state legislatures. Many states let their politicians draw the maps. Over the past two decades, Republicans have invested large amounts of money into controlling state legislatures, and thus, the redistricting process, in much of the country. Their investment helped lock their party in power in key states and in Congress for nearly a decade.
Pennsylvania is a swing state with divided control—a Democratic governor and a Republican Legislature. Democrats have a chance to flip both state legislative chambers, but their best shot is in the State House, where they need to net nine seats.12 If Democrats flip the State House, they would control at least two of the three parties involved in mapmaking, giving them much-needed leverage in the negotiations. Republicans are targeting 17 seats to keep their majorities in the Legislature.
Pennsylvania had been known as one of the most extremely gerrymandered states until 2018, when the State Supreme Court declared GOP maps unconstitutional and forced the state to redraw the districts,13 which will play a huge role in helping Democrats win back the majority in Congress in the future.
Governor Wolf’s Health Reform Plan
On October 2, 2020, Pennsylvania’s Governor Tom Wolf unveiled a health reform plan addressing comprehensive health reforms that focus on physical and behavioral health, while promoting affordability, accessibility and value in healthcare.14
“The current pandemic will make healthcare access even more difficult.”
The current pandemic will make healthcare access even more difficult. The state estimates that more than 1.5 million Pennsylvanians are expected to be uninsured. Additionally, the coronavirus has worsened pre-existing inequities that are present in many disadvantaged neighborhoods, which disproportionately impact the minority community in Pennsylvania.
There are three main components of Governor’s health reform plan.14
Interagency Health Reform Council (IHRC). Established with an executive order,15 the IHRC will be composed of commonwealth agencies involved in health and the Governor’s office. The initial goal is to develop recommendations by December 30, 2020, to find efficiencies in the healthcare system by aligning programs where feasible, including the joint purchasing of medications, aligning value-based purchasing models and using data across state agencies to promote evidence-based decisions.
Regional Accountable Health Councils (RAHCs). The Department of Human Services will add requirements to managed care agreements to form five RAHCs across the state. RAHCs will be required to collectively develop regional transformation plans—built on community needs assessments—to reduce disparities, address social determinants of health and align value-based purchasing arrangements.
Health Value Commission. The Governor will work with the Legislature to establish the Health Value Commission, responsible for keeping all payors and providers accountable for healthcare cost growth, to provide the long-term affordability and sustainability of the healthcare system and to promote whole-person care. As proposed, the newly created entity would be led by up to 15 commissioners appointed by the Governor and the General Assembly who have expertise in the healthcare marketplace, including five state agency heads.
Multiple healthcare organizations and professionals support the health reform plan16 to make healthcare more affordable, accessible and equitable for every Pennsylvanian. Some of those groups include the United States of Care, Altarum’s Healthcare Value Hub and the Pennsylvania Academy of Family Physicians.